Simply put, PC games are hamstrung by the fact they have to produce games that have to be playable on an ENORMOUS variety of machine specs, whereas console games only have to make sure it runs well on the console it's being provided for. Sure, hardcore gamers constantly upgrade/replace computers with top-of-the-line equipment, but the hardcore game community is not where the largest chunk of revenue comes from these days. WoW's genius (not to turn this into a WoW thread) was that it produced a game with massive hardcore and casual appeal, and backed that up by producing a game that looks and runs well on relatively old and outdated PCs.

Also, graphics are a great hook for getting someone to try a game, but if you want word-of-mouth sales, or in the case of MMO's, recurring subscription fees, eye candy only goes so far. If your game has no substance and only nice graphics, people won't stick with it or may not even try it at all.